China Trading Just Above Critical Support For The Bulls

The iShares China ETF FXI has been pulling back very bearishly recently, taking the global markets down with it. So far, the damage has been painful in the short-term, but nothing irreversibly bearish has occurred on the price chart.

What do the charts say?

At $37.47, technicians note that FXI may still just be in a corrective move to the downside. As long as the $37.40 level holds as support, they note, FXI could easily turn back to the upside and make a run towards $45.26 and points beyond. If, on the other hand, $37.40 is violated on a closing basis (especially on a weekly close), all bullish bets are off according to technicians. The next major support below $37.40 comes in at around $33.

The Chinese government had better get going on whatever stimulus they can put together or things could get out of control on the downside. As long as the key support at $37.40 holds up, though, the benefit of the doubt has to be given to the bulls in FXI.